Yuan Down Again But at a More Gradual Pace

The dollar is unchanged against the Swiss franc and Aussie dollar, up 0.6% against the loonie, 0.5% relative to the euro, 0.9% versus the kiwi and 0.2% vis-a-vis the yen and sterling.

In Pacific Rim stock market action, the Shanghai Composite Chinese index recovered 1.8%. Equities rose 2.3% in Indonesia, 1.0% in Singapore and Japan, 0.6% in Hong Kong and 0.4% in South Korea. Stocks have climbed 1.9% in Italy, 1.6% in France, 1.3% in Germany, and 1.1% in Spain but just 0.3% in Britain. Greece’s market is down, and U.S. stocks are off 0.3% after the release of retail sales, import prices and jobless claims.

Commodity prices have weakened. Comex gold is down 0.7% to $1,116.20 per ounce, and WTI crude oil has dropped 1.0% to $42.88 per barrel.

Ten-year sovereign debt yields have risen seven basis points in Britain and two bps in the U.S., Japan and Germany.

The Bank of Korea’s key interest rate, which was cut by 25 basis points in March and June, was left at a record low of 1.50% after the latest policy meeting.

Bangko Sentral ng Pilipinas left the Filipino overnight borrowing rates and lending rates unchanged at 4% and 6%. Such were last changed in September 2014.

The ECB “Account” of the Governing Council’s July 15-16 meeting adopts a trust but verify tone. Officials observed moderate economic recovery and evidence of low, but rising, inflation, but they felt that more data is required to determine that a turning point in inflation had indeed been reached. Officials intend to maintain quantitative easing for at least the full 20 months originally planned.

U.S. retail sales growth in July of 0.6% on month and 2.4% on year was a tad stronger than anticipated and led by the auto industry. Jobless insurance claims last week of 274K was near expectations and resulted in a low 266-1/4K four-week average. U.S. import prices dived 0.9% on month in July and 10.4% on year. Non-fuel import prices fell 0.3% on month and 2.6% on year. Export prices slid 0.2% on month and 6.1% on year.

Japanese core domestic machinery orders sank by an outsized 7.9% in June and thus rose just 0.3% in the second quarter. But foreign machinery orders leaped 20.3% on month and climbed 8.0% between 1Q and 2Q.

It was confirmed that German consumer prices rose 0.2% on month and by that amount as well from July 2014. The year-over-year rise was the lowest since February.

French consumer prices also rose 0.2% between July 2014 and July 2015. Spanish CPI inflation was 0.1% in that period. In the year to July, Irish and Swedish consumer prices eased 0.2% and 0.1%.

The Swiss PPI/import price index dropped 0.3% on month in July and recorded a 12-month 6.4% rate of decline.

Greek real GDP unexpectedly rose 0.8% last quarter and by 1.5% from a year earlier. Dutch retail sales rose 0.3% in June.

Malaysian GDP increase 4.9% in the year to the second quarter and posted a MYR 7.6 billion current account surplus in the latest quarter.

In New Zealand, food prices rose 0.6% on month and 1.2% on year in July. New Zealand’s manufacturing purchasing managers index in July was 53.5, a 2-month low after printing at 55.2 in June.

The British RICs house price balance improved to a reading of 44% last month after 40% in June.

Expected Australian inflation accelerated to 3.7% in August from 3.4% the month before.

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